FINRA Enforcement • Case No. 2022075399001

The Firm That Looked Away: How IRC Securities Let Unregulated Investment Sales Run for Over Two Years

EvilCorporations.com • FINRA AWC No. 2022075399001 • 6 min read

The Non-Financial Ledger: What It Feels Like to Be on the Other Side

Imagine someone you trust hands you a piece of paper. It promises you a fixed rate of return. The person handing it to you works at a registered financial firm. You have no reason to believe the investment is operating in the shadows, unsupervised, unchecked. You believe the system is working.

That belief is the product of decades of regulatory architecture, of FINRA and the SEC and all the agencies built after people were robbed in broad daylight by the financial industry. When you sign a promissory note from someone affiliated with a member firm, you assume that someone, somewhere, is watching. That a compliance officer reviewed the deal. That someone checked whether this note was a security and whether it was sold to you the right way.

At IRC Securities, for at least 25 months, nobody was watching. A registered representative disclosed in January 2021 that he was selling promissory notes through an outside business. IRC saw the disclosure. IRC had procedures requiring them to evaluate whether those notes were securities. IRC’s own written rules noted, explicitly, that promissory notes “often are securities.” Then IRC stamped the activity as an approved outside business activity and filed it away.

The investors who received those 23 additional promissory notes between 2021 and 2023 are not named in the regulatory document. Their losses, if any, are not quantified in the settlement. They do not appear in the $45,000 fine. They are not awarded anything. FINRA’s enforcement process in this case produced a censure and a fine payable to the regulator, not restitution to any investor who may have been harmed by investing in an unsupervised scheme through a rep whose activities the firm deliberately chose not to scrutinize.

The betrayal here is structural. A firm that exists to supervise its representatives decided that the paperwork was good enough, that a checkbox would do, that the disclosure of promissory note sales was someone else’s problem to evaluate. The investors on the other end of those notes trusted the system. The system failed them while collecting its licensing fees and operating as a normal FINRA member in good standing.

Legal Receipts: The Document Speaks

Every finding below comes directly from FINRA AWC No. 2022075399001. These are not interpretations or summaries. These are the regulator’s own words.

“IRC failed to evaluate whether this activity was properly characterized as an OBA or whether it should instead be treated as an outside securities activity subject to the requirements of FINRA Rule 3280.” FINRA AWC No. 2022075399001 — Overview

• This statement confirms IRC received the disclosure and made a deliberate decision without performing the analysis the rule required. Failure to evaluate is not an oversight; it is a compliance decision.
• FINRA Rule 3280 governs “private securities transactions,” which carry strict approval, recordkeeping, and supervision requirements. By skipping the evaluation, IRC ensured those protections were never triggered.

“IRC’s WSPs also highlighted, in their section on PSTs, ‘that promissory notes often are securities.'”

“Once IRC received the required written notice, IRC’s WSPs required the firm to complete the required review under FINRA Rule 3270.01, including by considering whether the activity is properly considered an OBA or if it should be considered a private securities transaction (PST) subject to the requirements of the firm’s WSPs applicable to PSTs.” FINRA AWC No. 2022075399001 — Facts and Violative Conduct

• IRC’s own written supervisory procedures are documented here as requiring exactly the step IRC failed to take. This is not a case of ambiguous rules. The firm’s own internal policies mapped the correct path, and the firm ignored them.
• The fact that FINRA quotes IRC’s WSPs against them demonstrates that the regulatory failure was internal first. The written procedures existed. The execution did not.

“Between January 2021 and April 2023, the registered representative sold at least 23 additional promissory notes on behalf of his OBA without the firm’s knowledge or supervision.” FINRA AWC No. 2022075399001 — Facts and Violative Conduct

• “Without the firm’s knowledge or supervision” is the direct consequence of the compliance failure. Once IRC rubber-stamped the activity as an OBA without deeper review, the firm lost all legal visibility into what its representative was doing with investor money.
• The phrase “at least 23” matters. FINRA is saying the documented count is a floor, not a total. The actual number of notes sold to investors could be higher.

“IRC approved the representative’s activity as an amendment to his previously-disclosed OBA without further evaluation.” FINRA AWC No. 2022075399001 — Facts and Violative Conduct

• The word “approved” here is critical. IRC did not ignore the disclosure; it actively greenlit the promissory note activity. That approval gave the activity a veneer of legitimacy while stripping it of any regulatory oversight.
• This is the mechanism by which the harm was enabled: not silence or neglect, but a formal act of approval that foreclosed further scrutiny.

Societal Impact Mapping

Public Health of the Financial System

The damage here is systemic. When one firm abandons its supervisory obligations, the entire market’s credibility erodes for every investor who depends on the assumption that member firms are doing their jobs.

• Investors who purchased promissory notes from the unnamed registered representative between January 2021 and April 2023 did so under the assumption that IRC was supervising the activity. That assumption was factually false for the entire duration.
• Promissory notes used as investment vehicles have historically been associated with fraud. The SEC and FINRA have both issued investor alerts warning the public that fraudulent promissory note schemes are among the most common investment scams, particularly targeting retail investors seeking fixed returns.
• The absence of supervision means investors had no recourse mechanism functioning in real time. Any red flags, suitability concerns, or outright fraud in the rep’s note activity would have gone undetected by the firm during those 27 months.
• IRC’s failure signals to the broader industry that the cost of non-compliance, in this case $45,000, is not a meaningful deterrent relative to the administrative burden of running a full compliance function on every outside activity.

Economic Inequality

Regulatory infrastructure designed to protect ordinary investors functions only when the firms inside it actually enforce the rules. When they do not, working people bear the cost.

• Promissory note investments marketed with “a fixed rate of interest” are exactly the kind of product that attracts people who cannot afford to lose principal. Retirees, small savers, and people seeking stable income are the core demographic. These are not investors with legal teams on retainer.
• The settlement produced no restitution for any investor. The $45,000 fine goes to FINRA as a regulatory penalty. The investors who may have put money into unsupervised note offerings received zero direct compensation from this enforcement action.
• Sophisticated institutional investors rarely encounter this problem because they have compliance departments of their own. The gap in protection created by IRC’s failure falls entirely on individual investors who rely on the assumption that their counterpart’s firm is watching.
• The AWC structure itself, under which IRC paid a fine and admitted nothing, means the public record carries no finding of fact that could anchor a private civil lawsuit. Investors seeking damages face a legal landscape where the regulator settled but the corporation denied nothing and admitted nothing.

The “Cost of a Life” Metric: What the Fine Actually Means

What Now? Here Is Who Is Responsible and What You Can Do

The documented decision-maker at IRC Securities is the following individual. These names and titles appear in the source document or are inferable from it.

• Brian O’Day, CEO, IRC Securities LLC: O’Day signed the AWC on January 8, 2025, on behalf of the firm. His signature certifies that “a person duly authorized to act on Respondent’s behalf has read and understands all of the provisions of this AWC.”
• William D. Edick, Counsel (Pickard Djinis and Pisarri LLP): Edick served as legal counsel for IRC Securities in the settlement process. His firm is based in Washington, DC.
• Nicolas W. Steenland, Counsel, FINRA Department of Enforcement: Steenland accepted the AWC on behalf of FINRA’s Director of the Office of Disciplinary Affairs, by delegated authority.
• The unnamed registered representative: The rep who disclosed and then sold at least 23 promissory notes unsupervised is not identified in the AWC. FINRA’s enforcement document targets the firm, not the individual. Investors interacting with IRC should consult FINRA BrokerCheck to identify representatives associated with the firm and any individual disciplinary history.

Watchlist: Agencies That Should Be Watching This

• FINRA (Financial Industry Regulatory Authority): The primary regulator here. FINRA brought this action and imposed the fine. This AWC becomes part of IRC’s permanent disciplinary record, which should be factored into any future examination cycle.
• SEC (Securities and Exchange Commission): FINRA reports to the SEC. If the promissory notes sold by the rep are confirmed securities, the SEC has independent jurisdiction over whether those sales constituted unregistered securities offerings or fraud.
• CFPB (Consumer Financial Protection Bureau): While the CFPB’s direct jurisdiction focuses on consumer financial products, the systemic pattern of unsupervised investment sales affecting retail investors overlaps with its mandate to monitor financial market practices for consumer harm.
• State Securities Regulators: Each state where the promissory notes were sold may have an independent enforcement interest. Investors in those states should contact their state securities regulator directly to determine whether state-level complaints or restitution actions are possible.

What You Can Do Right Now

• If you purchased a promissory note from anyone affiliated with IRC Securities LLC between November 2020 and April 2023, file a complaint with FINRA at finra.org/investors/have-problem. FINRA’s investor complaint center is free to use and creates an official record.
• Check any financial professional’s disciplinary history on FINRA BrokerCheck at finra.org/brokercheck before investing. BrokerCheck is free, takes under two minutes, and shows every regulatory action, customer complaint, and criminal disclosure on record for any FINRA-registered individual or firm.
• If you lost money on a promissory note investment tied to an OBA at any brokerage firm, consult a securities arbitration attorney. FINRA operates an arbitration forum specifically for investor-firm disputes; many securities attorneys offer free initial consultations and work on contingency for investor claims.
• Support organizations that push for stronger retail investor protections, including the North American Securities Administrators Association (NASAA) and the Public Investors Advocate Bar Association (PIABA), both of which advocate for accountability in exactly these types of cases.
• Share this story with anyone you know who invests through a broker or who has been offered a promissory note investment promising fixed returns. The information asymmetry between investors and their brokers is real; the more people who understand how supervision failures happen, the harder it is to get away with it.